1. CASE COMMENT ON M.C. MEHTA vs.

UNION OF INDIA

FACTS:

 A writ petition under Art 32 of the Constitution has been brought before the SC by way
of PIL on 1985 for the closure of Sriram on the ground of health hazard and for laying
down principle and norms for determining the liability of the large enterprises engaged in
manufacture and sale of hazardous products.
 A question was raised sometimes in March 1985 in parliament in regard to possibility of
major leakage of Liquid chlorine from the Caustic Unit of Shriram and of danger to the
lives of thousands of workers and other
 The writ petition was pending on 4th and 6th December 1985 there was escape of Oleum
gas from one of the units of Sriram and as a result of such leakage several persons were
affected and according to the petitioner and the Delhi Bar Association, one Advocate
practicing in the Tis Hazari Courts died.
 Application were filed by the Delhi Legal Aid and advice Board and the Delhi Bar
Association for award of compensation to the person who had suffered harm on account
of escape of Oleum Gas.

The case of M.C. Mehta v. Union of India originated in the aftermath of oleum gas leak from
Shriram Food and Fertilizers Ltd. complex at Delhi. This gas leak occurred soon after the
infamous Bhopal gas leak and created a lot of panic in Delhi. One person died in the incident and
few were hospitalized. The case lays down the principle of absolute liability and the concept of
deep pockets. Sriram was a subsidiary of Delhi Cloth Mills Limited, was engaged in the
manufacture of dangerous chemical.

It is the famous tort law case which brought in the principle of absolute liability. Shriram
Food and Fertilizer Industry, a subsidiary of Delhi Cloth Mills Limited, was engaged in the
manufacture of dangerous chemical. On December 1985, large amounts of oleum gas leaked
form one of the units in the heart of Delhi which resulted in the death of several persons. The
leakage, resulted from the bursting of a tank containing oleum gas, was caused by mechanical
and human errors. It created a scare among the people residing nearby and within two days,
another leakage, a minor one, broke out as a result of oleum gas escaping from the joints of a
pipe.

On 6th December 1985, the District Magistrate, Delhi ordered Shriram to stop the
manufacturing and processing of hazardous chemicals and fertilizers at their establishment in
Delhi and to remove such chemicals and gases from Delhi. At this particular point, M.C. Mehta
moved to Supreme Court to file PIL and claim for compensation for the losses caused and also
demanded that the closed establishment should not restart.

ISSUE:

The first issue in contention was whether the caustic chlorine plant of shriram should be
allowed to restart the plant and if so, subject to what conditions keeping in mind that the
operation of the plant should no longer pose a hazard or risk to the community.

The second issue brought forth to discuss was whether shriram which manufactures and
is engaged in the production of hazardous substances at the cost of environment of human n life
should be held absolutely liable

The third issue is whether Shriram could be considered to be a state within the ambit of
article 12?

The fourth issue raised was whether the application for compensation filed under the
article 21 is available against shriram which is owned by Delhi cloth mills limited a private
corporation and which is engaged in an industry vital to public interest and with potential to
affect the life and health of the people.

1. What is the scope and ambit of the jurisdiction of the Supreme Court under Article 32 since
the application for compensation are sought to be maintained under Article?

2. Whether Article 21 is available against Shriram which is owned by Delhi Cloth Mills Limited,
a public company limited by shares and which is engaged in industry vital to public interest and
with potential to affect the life and health of the people?
3. What is the measure of the liability of an enterprise which is engaged in a hazardous or
inherently dangerous industry, if by reason of an accident occurring in such industry, persons die
or is injuries are involved here are?

4. Whether article 21 was available against Shriram and whether Shriram owned by Delhi cloth
Mills ltd. Public co. Comes within the meaning of state under the article 12?

Court Comment:

On the question of developing a new doctrine to attach liability the court commented that:-

We must also deal with one other question which was seriously debated before us and
that question is as to what is the measure of liability of an enterprise which is engaged in a
hazardous or inherently dangerous industry, if by reason of an accident occurring in such
industry, persons die or is injured. Does the rule in Rylands v. Fletcher apply or is there any
other principle on which the liability can be determined? The rule in Rylands v. Fletcher was
evolved in the year 1866 and it provides that a person who for his own purposes being on to his
land and collects and keeps there anything likely to do mischief if it escapes must keep it at his
peril and, if he fails to do so, is prima facie liable for the damage which is the natural
consequence of its escape. The liability under this rule is strict and it is no defence that the thing
escaped without that person’s wilful act, default or neglect or even that he had no knowledge of
its existence. This rule laid down a principle of liability that if a person who brings on to his land
and collects and keeps there anything likely to do harm and such thing escapes and does damage
to another, he is liable to compensate for the damage caused.

Of course, this rule applies only to non-natural user of the land and it does not apply to
things naturally on the land or where the escape is due to an act of God and an act of a stranger
or the default of the person injured or where the thing which escapes is present by the consent of
the person injured or in certain cases where there is statutory authority. We would therefore hold
that where an enterprise is engaged in a hazardous or inherently dangerous activity and harm
results to anyone on account of an accident in the operation of such hazardous or inherently
dangerous activity resulting, for example, in escape of toxic gas the enterprise is strictly and
absolutely liable to compensate all those who are affected by the accident and such liability is not
subject to any of the exceptions which operate vis-à-vis the tortious principle of strict liability
under the rule in Rylands v. Fletcher. We would also like to point out that the measure of
compensation in the kind of cases referred to in the preceding paragraph must be co-related to
the magnitude and capacity of the enterprise because such compensation must have a deterrent
effect. The larger and more prosperous the enterprise, the greater must be the amount of
compensation payable by it for the harm caused on account of an accident in the carrying on of
the hazardous or inherently dangerous activity by the enterprise.

JUDGMENT:

On 6 December 1985, the District Magistrate,Delhi ordered Shriram to stop the

manufacturing and processing of hazardous chemicals andfertilizers at their establishment in
Delhi and to remove such chemicals and gases from Delhi. At this particular point, M.C. Mehta
moved to Supreme Court to file PIL and claim for compensation for the losses caused and also
demanded that the closed establishment should not restart.

The Court held that as Sriram could not be subjected to the discipline under Article 21,
the enterprise having not been decided as “Authority” within Art 12 of the constitution and
accordingly directed the Legal Aid and Advise Board and the Delhi Bar Association to Approach
the appropriate Courts to Claim compensation for the victims of the Oleum Gas Escape.

The Supreme Court held that Shriram is required to obtain a license under the Factories
Act and is subject to the directions and orders of the authorities under the Act. It is also required
to obtain a license for its manufacturing activities from the Municipal authorities under the Delhi
Municipal Act, 1957. It is subject to extensive environment regulation under the Water
(Prevention and Control of Pollution) Act, 1974 and as the factory is situated in an air pollution
control area, it is also subject to the regulation of the Air (Prevention and Control of Pollution)
Act, 1981. It is true that control is not exercised by the Government in relation to the internal
management policies of the Company.

J.Bhagwati thereafter stated that, “We in hold our hands back and I venture to evolve a
new principle of liability which English Courts have not done. We have to develop our own law
and if we find that it is necessary to construct a new principle of liability to deal with an unusual
situation which has arisen and which is likely to arise in future on account of hazardous or
inherently dangerous industries which are concomitant to an industrial economy, there is no
reason why we should hesitate to evolve such principle of liability merely because it has not been
so done in England. We are of the view that an enterprise which is engaged in a hazardous or
inherently dangerous industry which poses a potential threat to the health and safety of the
persons working in the factory and residing in the surrounding areas owes an absolute and non-
delegable duty to the community to ensure that no harm results to anyone on account of
hazardous or inherently dangerous nature of the activity which it has undertaken. The enterprise
must be held to be under an obligation to provide that the hazardous or inherently dangerous
activity in which it is engaged must be conducted with the highest standards of safety and if any
harm results on account of such activity, the enterprise must be absolutely liable to compensate
for such harm and it should be no answer to the enterprise to say that it had taken all reasonable
care and that the harm occurred without any negligence on its part. Since the persons harmed on
account of the hazardous or inherently dangerous activity carried on by the enterprise would not
be in a position to isolate the process of operation from the hazardous preparation of substance or
any other related element that caused the harm the enterprise must be held strictly liable for
causing such harm as a part of the social cost for carrying on the hazardous or inherently
dangerous activity.

Since we are not deciding the question as to whether Shriram is an authority within the
meaning of Article 12 so as to be subjected to the discipline of the fundamental right under
Article 21, we do not think it would be justified in setting up a special machinery for
investigation of the claims for compensation made by those who allege that they have been the
victims of oleum gas escape. But we would direct that Delhi Legal Aid and Advice Board to take
up the cases of all those who claim to have suffered on account of oleum gas and to file actions
on their behalf in the appropriate court for claiming compensation against Shriram. Such actions
claiming compensation may be filed by the Delhi Legal Aid and Advice Board within two
months from today and the Delhi Administration is directed to provide the necessary funds to the
Delhi Legal Aid and Advice Board for the purpose of filing and prosecuting such actions. Thus
the High Court was directed to nominate one or more Judges as may be necessary for the
purpose of trying such actions so that they may be expeditiously disposed of.
CONCLUSION:

If the enterprise is permitted to carry on an hazardous or inherently dangerous activity for

its profit, the law must presume that such permission is conditional on the enterprise absorbing
the cost of any accident arising on account of such hazardous or inherently dangerous activity as
an appropriate item of its overheads. Such hazardous or inherently dangerous activity for private
profit can be tolerated only on condition that the enterprise engaged in such hazardous or
inherently dangerous activity indemnifies all those who suffer on account of the carrying on of
such hazardous or inherently dangerous activity regardless of whether it is carried on carefully or
not. The Court also pointed out that the measure of compensation in the kind of cases referred to
must be correlated to the magnitude and capacity of the enterprise because such compensation
must have a deterrent effect. The larger and more prosperous the enterprise, greater must be the
amount of compensation payable by it for the harm caused on account of an accident in the
carrying on of the hazardous or inherently dangerous activity by the enterprise.